Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-08-01
WHOLE NO. 1881.

railroad and telegraph line from the Missouri
river TO the Pacific ocean and TO secure ~ the
government the use Of the same for postal mil
itaTy ana other purposes" approved July /.
1867 ana also 10 al er and amend the Act ~
Congress approved July . 1861 in amendment
OF said first named Act commonly known as the
thurman Act ana If not. in what particu-
lars they have failed 10 comply
Answer-The Central Pacific Railroad Com,
pany has complied with all the Acts e-uuler-
ated in this interrogatory in letter and in
spirit, TO the satisfaction of the officers hereto
fore appointed under the several Acts Of Con
gress To examine into the Affairs of this co n
pany. The first examination was male in 1879
and included everything from the completion
OF the road up TO the date of that examination.
Since that tire aunual examinations have been
made and reported upon. The last report was
hled December 81, 1856
PAYMENT OF INDEBTEDNESS
IS. Also to inquire what sums the Pacific raj
roads and their branches can severally nav an
nuGlly on account Of their Indebtedness 20 tile
united states y without imposing such burdens on
ti tle people; ana practically upon the localities
through which the roads pass as to retard .he
development of the country
Answer-It has been shown in'ausyer 10 in
Ierfogstory lc) that the present net earnings Of
the aided lines over which the Government line
extends, after paying the current charges which
are prior in lien to that of the United Sta es
amount TO about $4,000 per annum. The an
nuaI accIung interest on the UDilei States
bonds is sl,67l $40 So The whole amount of
net earnings therefore lacks 1890 900 of meeting
the accruing interest even If every ayeilable
dollar Were used for that purpose.
The net earnings of the aided road arc alone
available for the payment of the Government
debt. Thus the available funds can only be in
creased DY increasing these earnings. This can
only be done by increasing the rates through
Nevada and Utah, and 50 fixing the burden of
the debt upon the communities through which
the road runs. If 10 that extent this means
should be employed it Would retard the de-
velopment of the country and impose burden
Tor BENEFITS which have been shared BY the
country at large, and particularly by the several
depaTtmeL IS of the Government
TESTIMONY OF +. s. DoUTY.
Frank 5. Douty, Secretary of the Pacific In
proyement Company, etc. was the next witness
In answerto questions he stated that the Western
Development was formed before the Pacific I'm
provement Company. The incorporators Of the
Western Development Company were John Mil
Ter. =. $. Douty T. C. Ross. II. X. White and G.
p Phillips. The first officers were f. s. Doutv
President, and John Miller, Secretary. The
stockholders were Messrs. Stanford Hopkins
Crocker, Huntington and Cotton. The capita1
| stock was 50, 900 900.
All the contracts between the c. p p = and
| the Western Development were based on cost,
with lO per cent added. The work was the
| building of bridges and buildings They did
| not do any track laying. The statement of cost
| was prepared in my Office
Mr.. AGdersOu asked the witness Can you
! furnish us With statement of the gross annual
amount of this work done by the compenv@'
- totllt Dul IL NOulO take some little lime.
! The books undoubtedly contain it ALL
Were there not large loans made BY the
| Central Pacific Railroad Company 70 the West
ern Development Company for which Southern
Pacltic bonds were given as collateral security ~
81 believe there were
Was there not some 100000 loaned N this
manner?'
Il understand it so. The loan, believe, has
since been paid, also in bonds
Do You remember the facts of the bonds of
the sinking fund coming into possession of the
Western Ipvn
% don't remember the figures but I think the
| amount was about $1,000, 900. The Western De-
! velopment Company used the Central Pacific
| Railroad Company as bank in which to de-
| post money, and think this money was some
that had been deposited by the Western Deyel-
opment Company
Did not the Western Development Company
sometimes draw ont more than they had on de-
| posit?"
= They may have done 50. do not know"
| "Wou q the Central Pacific Railroad Company
| honors draft of the Development Company in
case they had no funds ou depost?'
They probably would. The same as any
| bank would. The Southern Pacific bonds were
used by, the Development Company to pay its
| Indebtedness"
THE NORTHERN RAILWAY.
| The witness said that the Western Develop
| ment Company constructed a considerable por-
| ton of the Northern Railway. which begins at
! Oakland Point and extends to Martinez, thence
| to SuiSuD. 1t commences again at Woodland
| and ends at TehGma. The road was built in
/
| Oakland portion OF it was built in 1S77 At the
| time Of this construction do not know who the
| stockholders were The Secretary was Mr. Z.
| H. Miller l understood that Stanford and the
| others were the head men. General Cotton
seemed TO be the most actively engaged in the
| work. The liabilities of the Western Develop
| ment Company at one time would exceed the
| assets. The gross amount of the liabilities are
| ten or twelve millions. I think at the present
time the assets ana liabilities are about stand
| off.
What other roads did the Western Develop
ment Company buildY'
The San p bio and Tulare road that begins
at Martinez and extends along to Tracy. This
was completed at about the same time as the
| Northern Railway. The money for this work
was furnished by the same people have before
| mentioned. The road was, after its cOmpletion
| rented TO the Central Pacific"
This company also built a road from Gait TO
| lone, a distance OF about twenty-seyen miles
! The object OF this road was to develop some
| coal mines. The mines were owned bv The five
| gentlemen have named. This road was oper-
ated by The Ceutral Pacific, and the Develop
| ment Company received the rental A"
| The witness stated also. in replv to interr0ea.
| tories, that the Weston Development Company
| received the earnings over and above expenses
! Colorado river. This company was known az
| the Colorado Steam Navigation Company.
The sane five men were owners OF this COM
pany.
" THE PACIFIC IMPROVEMENT COMPANY
! Built the Southern Pacific of Arizona ana 10
now engaged in completing the California and
| Oregon road and building the Oregon and Cali
tornia road TO Ashland, Or. This company also
| built the continuation OF the Northern Railway
| from the Willows 70 Tehama
| - The construction of the Southern Pacific of
Arizona was commenced in 1878, and prose
| cuted continuously until the Rio Grande was
! reached. This embraced $50 miles This con
| tract which is with the Pacific Improvement
Company, is in the Office at Fourth and Town
send, streets. The first stockholders of the
| southern Pacific of Arizona were Cotton,
| Crocker and some local pe1ple in Arizona.
] stanford and Huntington subsequently became
1 interested in the company through the Paciic
| Improvement Company The capital stock of
the southern Pacific OF Arizona was 500, 900 600.
| Its bonded debt is $4,000 ,0C0 1t was leased to
| the Central Pacific. The rental was based on
what the interest would be on the outstanding
! bonds"
AT this point in the testimony The hour for ad-
! JouInmenG arrived, and before Mr. Douty LEFT
| the room he was served with subpoena duces
| tecu@ to produce the minute books OF the
| Western Development Company at the zesslon OF
the Commission on Monday to which time the
| meeting adjourned.